Cemex guidance

Cemex guidance
Published: 13 September 2005


Cemex said on Monday it saw third-quarter  EBITDA close to US$1bn, up 50 per cent from a year earlier on higher sales.

Cemex said revenues would reach US$4.4bn in the July-September period, up 115 per cent and largely boosted by income from the US$5.8bn acquisition of Britain’s RMC Group, the world’s largest ready-mix concrete maker.

Cemex did not mention any impact of the expected massive reconstruction program in the United States from the devastation caused by Hurricane Katrina, which has pushed up its stock price in recent sessions.

Analysts expect that the Mexican company’s sales and earnings in future quarters will be boosted by Katrina, with roads and housing needed to be rebuilt after the storm and Cemex in an ideal position as the top US cement maker and concrete player.

Cemex shares closed down 1.29 per cent on Monday at 54.24 pesos, not far from 12-month highs. Its American Depositary Receipts (ADSs) dropped 1.2 per cent to US$50.86.

"Revenues and EBITDA (for the third quarter) are expected to be in line with those of the second quarter 2005," said Cemex, giving guidance for its upcoming third-quarter earnings.

"Our strong year to date performance puts us on track to achieve our stated full-year EBITDA guidance and to increase our estimates for free cash flow, which is now expected at US$1.9bn in 2005," CFO Rodrigo Trevino said in a statement.

Trevino said Cemex expected to reach its so-called "cruising speed" ratio of 2.7 times net debt to EBITDA by the end of the quarter and about 2.5 times by the end of the year.

Reaching that ratio would be well ahead of schedule and could allow Cemex to go back on the acquisition trail again following a period concentrated on buying back debt in the wake of the RMC purchase, which halted the decade-long spending spree that made it a global powerhouse.

Domestic sales volumes are expected to be flat in the third quarter and sales in the United States are expected to increase two per cent in the July-September period.

In Spain, cement volumes are expected to be flat and in Britain cement volumes are seen down three per cent, from a decline in spending in infrastructure, maintenance and repairs.

Cemex said its derivatives position has improved US$281m since the end of June and that more than 95 per cent of the improvement will be on its third-quarter income statement.

Separately, Cemex said it intends to make a global public offering of 27m ADSs, plus up to another 3.99m ADSs to cover over-allotments.

"This transaction will not increase the number of shares outstanding and thus will not dilute existing shareholders," Cemex said.

The shares are being offered in connection with the unwinding of several forward contracts between several banks and Cemex, the company said.